Congress Should Press Janet Yellen on Federal Reserve's Regulatory Role

When Federal Reserve Chair Janet Yellen testifies before the House Financial Services Committee later this week, much of the attention will understandably focus on a few key numbers: 25 basis points – the magnitude of December's interest rate hike; nine years – the time since the Fed's last rate hike; and $4.5 trillion – the size of the Fed's balance sheet.

There, is, however, a less well-known number that should capture the attention of committee chair Rep. Jeb Hensarling and ranking member Rep. Maxine Waters: 13,071. That's the number of regulatory restrictions linked to the Federal Reserve. Put another way, it's the number of things that banks and other financial institutions regulated by the Fed "shall," "may" or "may not" do (not counting rules from other regulatory agencies).

Our recent analysis of the Dodd-Frank Wall Street Reform and Consumer Protection Act's effects on the Fed's regulatory role is striking. In the few years following its passage, the Fed added more than 3,000 new restrictions. For perspective, that's similar to the amount of regulatory growth seen from the Fed over the entire 15-year period leading up to 2010. 

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